After reviewing thousands of pitches, we can identify a few critical issues that most startups need to understand. We also have a few traps that trip up many, and few ways to figure out what makes you look interesting to investors.
1. Sell The Business Not the Idea:Forget about your genius idea for a moment and ask what does this look like to your prospective market and then, your investor? Completely change your point of view and tell us who will buy it and why. How much they might pay. This is the key point – event though it seems obvious to you it does not to an investor, who knows nothing about you, your industry or the problem you are going after.
2. What’s the Headline – the One Thing That Matters?You have a million ideas and a hundred ways to monetize the idea. Maybe. But no investor can absorb all these and they are probably not seen as credible. What they are looking for is the one thing that matters. In our experience, we have usually found it somewhere near the end of the pitch – like at the conclusion. If you see people perking up at the end, that’s probably your hook. Make that your headline.
3. Know Your Pitch Structure. You should never spend more than 1/3 of the pitch explaining your idea, then you want to talk about the business proposition and how you are going to make it happen and then, why you and your team are uniquely qualified to do so. Ask for the money and tell them what it’s for (finishing the tech or setting up a proven marketing plan).
4. Find the Big – or Describe the High Growth. Your idea needs to be big to be interesting to investors. If it can’t grow 10 times within 3-5 years don’t bother. And try to think whether it can grow 100 times because that is what investors are really looking for.
5. Tell Us How It Scales: The only reason you need an investor is because you have an idea that will grow with the infusion of capital. They are not there to give you free advice or share their contacts (if you’re lucky, they might) but to invest on the theory that you will grow at a fantastic rate. So you need to give them a formula or a conceptual structure that shows how an injection of capital can make it grow. Forget narrative, jargon or flowery adjectives and get down to gameplan.
1. Build Credibility: Show how your business background or experience somehow led you to or qualified you for this business.
2. Where is the Opportunity Sweet Spot?Tell us where money is to be made. Investors aren’t here because they love ideas, they are here because they love ideas that can make them money. In other words, ideas are the vehicle, the destinationis a wealthy exit.3. Talk About Sales. Products and services don’t sell themselves. Yousell and it is going to cost you somehow. Tell us how you get customers and how much it costs you. Better still, tell us how you can piggyback on bigger partners…..Never mention viral, they won’t believe you. (If you do have viral sales, show how you can institutionalize it because every investor knows that in the rare case that viral happens it can also stop just as quickly.)
1. Don’t Tell Us How Big the Market Is – Tell Us How You Will Carve Out a Piece Of It – And Make It Bigger….Just telling us how big the market is implies that if you just show up you’ll get a piece of it. Sorry, but it doesn’t work that way. No one givesyou market share, you have to earnit. Better yet, you have to make a newkind of market.
2. Don’t Tell Us What Other Companies Raised – Only What They Sold ForJust because company x raised a bunch of money in no way suggests that you will. There are a million reasons how they did that. But what they sold for has a roadmap and maybe you can follow that.
3. Don’t Say You Need Money For Sales – Say You Have Proven How To Market It And You Need Money To Scale. You are the no. 1 salesperson of your company so when you ask for money for sales, you are saying you really aren’t and the money is to help you find one. But if you say you have figured out how to market it, that scales.
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Posted on March 26, 2020